Our inflation problem

By Herbert Vego

YESTERDAY I heard a broadcaster waxing ecstatic over the backslide of the peso to P50.30 per US dollar because “it’s good news to families of overseas workers.”

In a sense it’s true. The “increase” from P48 to P50.30 to a dollar means that the housewife would gain more pesos to spend. In the long run, however, prices of goods would rise higher, in effect negating the numerical value added. “Inflation” is the word for it.

Inflation amid the coronavirus pandemic has soared to an average of 4.5% or more than double the 2.1% recorded in May 2020, according to the Philippine Statistics Authority.

In other words, inflation occurs when more money with lesser value floods the monetary system. This means that a stagnant income makes a wage earner poorer. Simply put, a country’s currency is as valuable only as its buying power.

The mere abundance of money supply arising from unrestrained printing of money by the government does not mirror prosperity.  A tale still being dished out by our elders who were children during the Japanese occupation in the 1940s is that “a sack of Japanese money during the war could only buy a small basket of food.”

It is easy to see why the US dollar has universal acceptability that serves to neutralize inflation. It is the currency of the most powerful and richest nation on earth. Currencies in other countries reveal their comparative worth against each other when weighed against the dollar.

If the value of the Philippine peso has kept pace with the American dollar in the past six decades, this nation could not have lagged behind. The gradual devaluation of the peso from two to a dollar in the 1950s to 50 pesos is therefore counterproductive, although housewives tend to welcome the illusory “bigger amount.”

When Manuel Roxas became first President of the new Philippine Republic in 1946, he vowed to live up to catapult the country to economic supremacy in Asia.

Indeed, in the 1950s, the Philippines was economically second only to Japan in Asia, besting China which was then known as “the sleeping giant”. Although the minimum wage was only P120 per month,  it was worth much more than today’s P12,000.

I recall that during my childhood in the early 1950s, a bus company in Iloilo City known as Star of the South was shuttling passengers between the City Proper and Jaro for  a fare of only six centavos. Today, the minimum fare is ten pesos.

A peso was all it took to reach San Jose, Antique by bus.

President Carlos P. Garcia – whose term covered the 1957-61 period – tried to boost local products through his Filipino First policy, which restricted imports of products that were locally available and encouraged the manufacturing sector to export whenever possible.

An Ilonggo entrepreneur established a food canning industry in Mandurriao,  Iloilo City. Lix Products canned home-style pork and beef delicacies such as adobo, menudo, sarciado and mechado.

After Garcia came President Diosdado Macapagal, who imposed “de-control” – a policy that pegged price ceilings on basic commodities, thus minimizing monetary inflation.

Even with the imposition of martial rule by President Ferdinand Marcos in 1972, the economy showed resistance to external pressures until the subsequent oil crisis which, coupled with the scarcity of rice, caused sudden increases in prices.

The unsolved assassination of Senator Benigno “Ninoy” Aquino in 1983 drove the value of the peso — down from seven to 13 against the dollar — which started the irreversible downward trend.

While the People Power or EDSA Revolution restored democracy in 1986 under the leadership of President Cory Aquino which attracted foreign investors, it failed to improve the lot of the poor masses.

Succeeding Presidents – Fidel Ramos, Joseph Estrada, Gloria Arroyo, Benigno Simeon Aquino III and Rodrigo Duterte – have likewise failed to lick the galloping monetary inflation, partially due to dependence on importation of goods that stalled the growth of local manufacturing industries.

On the other hand, South Korea relied heavily on her technocrats for the development of industrial zones. Today, South Korea no longer imports but exports locally-built cars and heavy equipment.

In contrast, our politicians and economic managers still look forward to more foreign loans and dole-outs, from which they could earn kickbacks.

A controversial case in point is the massive importation of Sinovac vaccine from China. No leass than Department of Health (DOH) Undersecretary Dr. Maria Rosario Vergeire told the Senate Committee on Finance that two doses of the brand cost ₱3,629.

The allegations on “kickback from vax” heightened with the report that Indonesia was importing Sinovac at the equivalent of P600 per dose or P1,200 for two doses in Philippine currency.

Indeed, while the Covid-19 pandemic has made the poor penniless, a few lucky pliticians must have earned more than enough to buy winning votes in 2022.

But that’s another story for another column.

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STILL NO DISCONNECTION BUT…

FOR one month and a half already, MORE Electric and Power Corp. (MORE Power), has not disconnected the power lines of Iloilo City residents with overdue payment of bills to give the less fortunate financial relief.

With the change in our quarantine status from Modified Enhanced Community Quarantine (MECQ) to the stricter Enhanced Community Quarantine (ECQ), MORE Power would continue to remain so lenient.

Since disconnection activities would resume once the city steps down to General Community Quarantine (GCQ), it would be prudent on our part to keep our power debt within affordable level.

Since suspension of disconnection was never meant to suspend bill payment online or via payment centers, meter reading and bill delivery would go on as usual.  Obviously, it’s because accumulated bills would be harder to pay.

According to MORE Power President Roel Castro, regardless of the customers’ payment delay, the company is obliged to pay on-demand power generators like PPC, PEDC and Aboitiz Renewables.  Therefore, it would be impossible for MORE Power to condone delayed payments without losing.

In a past column, this writer sounded the alarm about barangay officials who either pilfer electricity through “jumpers” or renege on their obligation to pay power consumed by the barangay halls and other facilities.

Power pilferage or violation of Republic Act No. 7832 is punishable by prision mayor (six months and one day to six years) or a fine ranging from ten thousand pesos (P10,000) to twenty thousand pesos (P20,000) or both, at the discretion of the court.

Those caught in the act of tapping electricity direct from secondary lines have already been charged in Court.

Tolerance of pilferage, on the other hand, could be more harmful because it could overload power lines, leading to malfunction of electrical appliances wned by the “generous sharer“.

Don’t you agree, Kapitana Irene Ong?